The USD/CAD pair is facing more downside pressure near 1.3730 as the US Dollar weakens in response to a soft Producer Price Index (PPI) report for July. This decline is expected to continue towards the key support level of 1.3700.
The latest PPI report from the United States Bureau of Labor Statistics showed that producer inflation grew at a slower pace than expected, leading to concerns about the strength of the US Dollar. This has also raised expectations that the Federal Reserve will take a more aggressive approach to policy normalization.
As a result of the soft US producer inflation data, investors have shown increased risk appetite, leading to gains in the S&P 500 and a decline in the US Dollar Index (DXY). Additionally, upbeat Oil prices have boosted the appeal of the Canadian Dollar, as Canada is a major exporter of Oil to the US.
Looking ahead, the focus will be on the US Consumer Price Index (CPI) report for July, which is set to be released on Wednesday. Expectations are for a modest increase in both headline and core inflation rates.
Overall, the weakening US Dollar and stronger Oil prices are driving the USD/CAD pair lower. Investors should keep an eye on economic data releases and geopolitical developments that could impact the currency pair in the coming days.
Analysis:
The USD/CAD pair is under pressure due to a weak US Dollar and strong Oil prices. Soft US producer inflation data has led to a decline in the Greenback, while upbeat Oil prices have boosted the Canadian Dollar. Investors should monitor upcoming economic data releases and geopolitical events for further insights into the currency pair’s movement.